1. Field of the Invention
The present invention relates generally to electronic commerce, and more specifically, to business-to-business electronic commerce.
2. Description of Related Art
In the business world, transaction costs associated with the buying and selling of products and raw materials can be significant. A single sale often requires a number of communications between the purchasing and selling entities, each requiring employee time to process, record, and approve the communications.
As an example of a typical business transaction, consider the situation in which a first company wishes to purchase a quantity of chemicals from a chemical supplier. A typical supply chain process for this type of transaction is illustrated in FIG. 1. The supply chain includes a number of component transactions between the purchasing company 101 and its supplier 102. These component transactions and an example of the documents associated with them are listed in box 103. Supporting third party services 105, such as banking and shipping services, are also involved in the transaction.
The purchasing company 101 may begin by making inquiries of its current suppliers to determine which one can supply the chemicals at the best price. This step often entails a lengthy request for proposal (RFP) process and many purchaser-supplier visits. The supplier and the purchaser agree on the specifications of the desired chemical and on the handling of any regulatory requirements. A purchase order is then issued by the purchasing company to officially place the order. The purchase order is processed and acknowledged by the supplier.
Actually shipping the chemical may involve a significant logistical effort. For example, a third party shipping company is selected, and in connection with shipping the chemicals, a shipping note and a bill of lading are generated and given to the shipping company. Additional documents such as a certificate of analysis, which verifies that the purchased chemicals are the ones ordered, and a material safety data sheet, which includes handling and safety information for the chemical, may also be generated by the supplier and transmitted to the purchaser.
Arrival of the chemicals at the purchaser triggers the creation of additional documents, such as a delivery receipt, an invoice, and eventually, payment by the purchasing company to the supplier for the delivered chemicals. The conventional supply chain process can thus be cumbersome, labor intensive, and relatively expensive.
A network of purchasers and suppliers such as those illustrated above can be conceptualized as a point-to-point network of trading entities. Such a network is illustrated graphically in FIG. 2. Each trading entity 201 communicates directly with other entities in the network via communication lines 202. Communication lines 202 represent, for example, communication by phone, facsimile, mail, or EDI messages (described below).
In an effort to automate records relating to purchasing and selling, many companies use enterprise resource planning (ERP) systems. ERP refers to a broad set of activities supported by multi-module application software that help a business manage the important parts of its operations, including product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders. An ERP system can also include application modules for the finance and human resources aspects of a business.
Although an ERP may help to automate a company internally, ERP systems of various companies are often not compatible with one another. Accordingly, documents that are to be exchanged with outside companies are often printed as hard copies, transmitted to the other company over communication lines 202 in the form of, for example, a facsimile, and manually entered in the other companies ERP system. Thus, although purchasers and suppliers may be automated internally, their systems are usually isolated from an ability to communicate with each other. Thus, despite automation at both companies, a “manual gulf” over communication lines 202 still exists between companies. Companies traverse the gulf between systems by manual processes such as mail, email, fax, meetings, and phone calls.
One attempt to take advantage of computerized ERP systems and to eliminate the manual gulf between companies is the electronic data interchange (EDI) protocol, which is a standard format for exchanging business commerce data. In an EDI exchange, automated systems, such as ERP systems at two of entities 201, exchange EDI messages over communication lines 202. An EDI message contains a string of data elements, each of which represents a singular fact, such as a price, product model number, and so forth, separated by delimiters. The entire string is called a data segment. One or more data segments framed by a header and trailer form a transaction set, which is the EDI unit of transmission (equivalent to a message). A transaction set often consists of what would usually be contained in a typical business document or form, such as a purchase order. The EDI standard is available from the Data Interchange Standards Association, of Virginia.
EDI, however, has not been widely adopted. It has proven to be relatively expensive to install and maintain, particularly for small companies. Further, as illustrated in FIG. 2, EDI only provides point-to-point automation and does nothing for integrating suppliers and customers in a business community. As a result, EDI is presently only used by a small fraction of the companies involved in business to business commerce.
Thus, there is a need in the art to automate the supply chain of businesses in a way that is both efficient and widely available to a large number of member companies.